Arizona HOAs: "Should We Amend Our CC&R's?"
Arizona HOAs: "Should We Amend Our CC&R's?"
July 10th, 2014
It is always interesting to me to see how many members of homeowner association boards of directors have not read or regularly reviewed their association’s CC&Rs and other governing documents. I think that most would agree that every board member should be familiar with the governing documents of their association. As a member of the board, it is also essential that a periodic review of the governing documents be conducted with the following questions in mind: “What changes, if any, need to be made”, and “Is this the year we try to amend our CC&Rs?”
My focus here is on amending the CC&Rs, the most important governing document for an association and usually the most difficult to amend. There are typically 3 reasons why an association might consider amending its CC&Rs. They are: 1) to address weaknesses or to add essential provisions that are missing; 2) to address specific issues in the association; and 3) to address and conform to changes in the law.
The most common request I receive when asked to review an association’s CC&Rs is to take a document that appears to have been written on papyrus using ink and a feather pen and come up with a list of provisions that are missing or that need to be strengthened. Many associations have CC&Rs that were written 30 or 40 years ago, or longer, that have never been amended or updated. Sometimes an association will have a more recent set of CC&Rs that are still lacking vital provisions. The following are some important provisions that I commonly see missing from CC&Rs or in need of alteration: a non-waiver provision; sufficient rule-making authority; proper language allowing an association to recover attorney’s fees and costs incurred in enforcing the CC&Rs and in collecting unpaid assessments and including said amounts as part of the association’s assessment lien against the property; and clear language regarding an association’s ability to enforce the restrictions in its CC&Rs. An association should consult with its attorney to determine if these provisions, and others, are missing and what can be done to improve its CC&Rs.
Associations may also want to amend its CC&Rs to address specific concerns in the community. If an association wants to restrict an owner’s use of his or her property, the authority for said restriction must be found in the association’s recorded CC&Rs. Too many times I see associations enforcing “restrictions” that are not found in the CC&Rs because the association thought it could just make a new rule rather than amend the CC&Rs. For example, if an association is interested in restricting the number of rentals, it must look to its CC&Rs for this authority. Amending the bylaws or rules and regulations to add rental restriction language is not legally sufficient. A careful review of the CC&Rs should be conducted before restricting certain activity, like rentals or pets, to make sure that such authority is contained in the recorded CC&Rs. An association should also consult with its attorney and seek an opinion letter if needs be.
Lastly, changes in Arizona law may cause an association to want to amend its CC&Rs. Every year the Arizona legislature makes a valiant effort to amend and add laws governing homeowner associations. With those changes may come the need to amend the CC&Rs. Many changes were made during last year’s legislative session only to be challenged and voided by the court. It appears that many, if not all, of the changes in the law from last year will be revisited this year. With that knowledge, an association can take the opportunity now to review and amend its CC&Rs in preparation for the changes that are sure to come. As an example, the changes last year included a limitation on an association’s ability to restrict rentals unless the CC&Rs already contained such a restriction before the law was passed. Whether it pertains to the number of rentals in your community or a recent change in the law that nullified a provision of the CC&Rs, an association should consider acting now, with the help of its attorney, to determine if any changes to its CC&Rs should be made through the amendment process.
The time is now to review your CC&Rs to determine if they need to be renewed, refreshed, and replenished. Please remember, however, that the association’s attorney should always be consulted and relied upon for advice and guidance during any attempt to amend the CC&Rs.